Tuesday, April 1, 2014

Service tax on Agriculture related service

1.Agriculture
related service1.1.Definition
related agricultural service:Agriculture: As per section 65B(3) of the act, it means the cultivation of plants and
rearing of all life-forms of animals, except the rearing of horses, for food,
fibre, fuel, raw material or other similar products;

Agricultural
extension: As per section 65B(4) of the act, it means
application of scientific research and knowledge to agricultural practices
through farmer education or training;

Agricultural
produce: As per section 65B(5) of the act, it means
any produce of agriculture on which either no further processing is done or
such processing is done as is usually done by a cultivator or producer which
does not alter its essential characteristics but makes it marketable for
primary market

Agricultural
Produce Marketing Committee or Board: As per section
65B(6) of the act, it means any committee or board constituted under a State
law for the time being in force for the purpose of regulating the marketing of
agricultural produce.

1.2.Exemption
in negative list:

As section 66(d) of the act, following services relating to agriculture
or agricultural produce would be exempt:

(i)agricultural operations directly related to
production of any agricultural produce including cultivation, harvesting,
threshing, plant protection or testing;

(ii)supply of farm labour;

(iii)processes carried out at an agricultural farm including tending, pruning,
cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating,
curing, sorting, grading, cooling or bulk packaging and such like operations
which do not alter the essential characteristics of agricultural produce but
make it only marketable for the primary market;

(iv)renting or leasing of agro machinery or vacant land
with or without a structure incidental to its use;

(vii)services by any Agricultural Produce Marketing Committee or Board or
services provided by a commission agent for sale or purchase of agricultural
produce;

Vide Finance act, 2013, word ‘seed’ has been removed from the expression ‘seed
testing’ in section 66D(d)(i) of the act. As a result of removal of word
‘seed’, testing activities not only directly related to seed testing but also
directly related to production of any agricultural produce like soil testing,
animal feed testing, testing of samples from plants or animals, for pests and
disease causing microbes will be covered by the negative list.

·Construction of storage of agricultural produce: services by way of construction, erection, commissioning, or
installation of original works pertaining to post- harvest storage
infrastructure for agricultural produce including a cold storages for such
purposes would be exempt. (Entry no. 14(d))

·Construction of mechanized food grain handling system: services by way of construction, erection, commissioning, or
installation of original works pertaining to mechanized food grain handling
system, machinery or equipment for units processing agricultural produce as
food stuff excluding alcoholic beverages would be exempt. (Entry no. 14(e))

·Job work relating to agriculture: Carrying out an intermediate production process as job work in relation
to agriculture, printing or textile processing would be exempt. (Entry no. 30)

·Transport of agricultural products by rail or a vessel:Services by way of transportation by rail or a vessel from one
place in India to another of the agricultural produce would be exempt. (Entry
no. 20(h))

·Transport of agricultural products by GTA: Services provided in respect of following agricultural produce by GTA by
way of transport in a goods carriage would be exempt: (Entry no. 21)

1.4.Clarification
by CBECTaxability on
activities relating agriculture: As per Guidance
notes on service tax issued by CBEC on 20th June, 2012 following
activities relating to agriculture would be taxable / exempt:

·Pisciculture, sericulture & floriculture: Activities like breeding of fish (pisciculture), rearing of silk worms
(sericulture), cultivation of ornamental flowers (floriculture) and
horticulture, forestry are included in the definition of agriculture.

·Plantation crops like rubber, tea or coffee: Such crops are also covered under agriculture produce.

·Potato chips or tomato ketchup: if such products are manufactured through process which alters the
essential characteristic of farm produce. Hence, such potato chips or tomato
ketchup would not qualify as agricultural produce.

·Cleaning of wheat: it would
be covered in the negative list entry even if the same is done outside the
farm.

·Shelling of paddy: it would
not be covered in the negative list entry relating to agriculture as this
process is never done on a farm but in a rice sheller normally located away
from the farm.

·Cereals, pulses, copra and jiggery: it would be covered in the ambit of ‘agricultural produce’ even though
on these products certain amount of processing is done by a person other than a
cultivator or producer.

·The process of grinding, sterilizing, extraction
packaging in retail packs of agricultural products, which make the agricultural
products marketable in retail market: such process
would not be covered in the negative list.

·Leasing of vacant land with a green house or a storage
shed meant for agricultural produce: it would be
covered in the negative list.

·Services of agricultural Produce Marketing Committees
or Boards: Such committees and boards are set up under a State
Law for purpose of regulating the marketing of agricultural produce. Such marketing
committees or boards have been set up in most of the States and provide a
variety of support services for facilitating the marketing of agricultural
produce by provision of facilities and amenities like, sheds, water, light,
electricity, grading facilities etc. They also take measures for prevention of
sale or purchase of agricultural produce below the minimum support price. APMCs
collect market fees, license fees, rents etc. Services provided by such
Agricultural Produce Marketing Committee or Board are covered in the negative
list. However any service provided by such bodies which is not directly related
to agriculture or agricultural produce will be liable to tax e.g. renting of
shops or other property.

my pvt. ltd. company contact a another company. agri commodity mustard seed grading,packing,storage work done. in these service like that grading,packing,storage applicable service tax when i generate a bill

my pvt. ltd. company contact a another company. agri commodity mustard seed grading,packing,storage work done. in these service like that grading,packing,storage applicable service tax when i generate a bill